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COA rules on coal bed gas dispute

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In settling a dispute between two Illinois companies regarding who has the legal right to recover coal bed methane gas, the Indiana Court of Appeals made its decision based on public safety and ruled in favor of the company assigned the coal bed gas lease.

The issue in Cimmaron Oil Corp. v. Howard Energy Corp., No. 26A01-0902-CV-67, is whether a 1976 lease that Cimmaron's predecessor obtained for the right to drill for and produce oil and gas includes the exclusive right to drill for and produce coal bed methane gas (CBM).

The Hardimans own the real property in Gibson County at question in the suit. In addition to the 1976 lease Cimmaron has, the Hardimans granted a coal bed gas lease to Howard Energy in 2001. In 2003, Howard Energy filed a complaint for declaratory judgment against Cimmaron and the Hardimans. Howard Energy argues the Cimmaron lease covers only the oil and gas estate and includes only the conventional natural gas emanating from the coal, while its lease holds the right to extract the coal bed methane.

The trial court issued declaratory judgment in favor of Howard Energy, adopting the "eastern rule" that CBM is part of the coal estate, and no interest in CBM passed by reason of the 1976 oil and gas lease. The trial judge also discussed public safety and how giving away control of the CBM from the coal mine operator wouldn't serve public interest.

Because the concept of producing CBM for commercial gain wasn't possible in 1976, it's up to the courts to determine whether that lease somehow permits it.

The Court of Appeals used rulings from other jurisdictions on the presumed or surmised intent in the grant of oil and gas leases pre-dating current technology. Some courts have considered CBM as part of the coal bed estate, as part of the oil and gas estate, or a distinct mineral estate.

The trial court in the instant case followed the "eastern rule" that CBM is a component of coal and CBM production and coal mining are best left in the control of a single entity, wrote Judge L. Mark Bailey. Cimmaron would rather the court adopt the "western rule," which says the holder of a broadly defined gas and oil estate may have rights to CBM, which is a form of gas.

The gas estate owner wasn't granted permission in the lease to invade the coal seam, which would be necessary to produce the CBM. In fact, the CBM would be from virgin coal seams and would require fracturing the seam with high pressure.

"The Hardimans did not explicitly agree to Cimarron's invasion of the coal bed in this manner; it is not reasonable to presume that the intent was to permit invasion of a valuable land asset, the coal bed, should a means of making profits arise in the future," wrote the judge.

The appellate court declined to adopt either rule, but agreed with the trial court that public policy would militate toward considering CBM to be part of the coal bed.

"Public safety would be disserved by pitting the miner who needs to dissipate CBM to prevent explosions against the gas estate owner whose financial resource is being depleted," wrote Judge Bailey. "Nevertheless, it is within the province of the Legislature, to which we defer, to make policy decisions."

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  1. It appears the police and prosecutors are allowed to change the rules halfway through the game to suit themselves. I am surprised that the congress has not yet eliminated the right to a trial in cases involving any type of forensic evidence. That would suit their foolish law and order police state views. I say we eliminate the statute of limitations for crimes committed by members of congress and other government employees. Of course they would never do that. They are all corrupt cowards!!!

  2. Poor Judge Brown probably thought that by slavishly serving the godz of the age her violations of 18th century concepts like due process and the rule of law would be overlooked. Mayhaps she was merely a Judge ahead of her time?

  3. in a lawyer discipline case Judge Brown, now removed, was presiding over a hearing about a lawyer accused of the supposedly heinous ethical violation of saying the words "Illegal immigrant." (IN re Barker) http://www.in.gov/judiciary/files/order-discipline-2013-55S00-1008-DI-429.pdf .... I wonder if when we compare the egregious violations of due process by Judge Brown, to her chiding of another lawyer for politically incorrectness, if there are any conclusions to be drawn about what kind of person, what kind of judge, what kind of apparatchik, is busy implementing the agenda of political correctness and making off-limits legit advocacy about an adverse party in a suit whose illegal alien status is relevant? I am just asking the question, the reader can make own conclsuion. Oh wait-- did I use the wrong adjective-- let me rephrase that, um undocumented alien?

  4. of course the bigger questions of whether or not the people want to pay for ANY bussing is off limits, due to the Supreme Court protecting the people from DEMOCRACY. Several decades hence from desegregation and bussing plans and we STILL need to be taking all this taxpayer money to combat mostly-imagined "discrimination" in the most obviously failed social program of the postwar period.

  5. You can put your photos anywhere you like... When someone steals it they know it doesn't belong to them. And, a man getting a divorce is automatically not a nice guy...? That's ridiculous. Since when is need of money a conflict of interest? That would mean that no one should have a job unless they are already financially solvent without a job... A photographer is also under no obligation to use a watermark (again, people know when a photo doesn't belong to them) or provide contact information. Hey, he didn't make it easy for me to pay him so I'll just take it! Well heck, might as well walk out of the grocery store with a cart full of food because the lines are too long and you don't find that convenient. "Only in Indiana." Oh, now you're passing judgement on an entire state... What state do you live in? I need to characterize everyone in your state as ignorant and opinionated. And the final bit of ignorance; assuming a photo anyone would want is lucky and then how much does your camera have to cost to make it a good photo, in your obviously relevant opinion?

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